MR. MCLAUGHLIN: Issue one: We're coming to America.

MEXICAN PRESIDENT VICENTE FOX: (From videotape.) Our position is to look for more and more of the recognition of more and more rights to more and more Mexicans, as much as possible, as many as possible.

MR. MCLAUGHLIN: President Vicente Fox of Mexico may be getting his way. Sparks are flying as the Bush administration floats a politically charged trial balloon that would change the face of the nation's immigration policy; amnesty status for the nation's 3 million Mexican illegals. We're not talking about all Hispanics living illegally in the United States; Mexicans exclusively.

This controversial proposal has a litany of problems. Remember, the proposed legalization is for Mexicans only.

Problem one: Non-Mexican Hispanic illegals housed in the United States are now estimated at 3 (million) to 4 million: Hondurans, Dominicans, Colombians, Venezuelans, Peruvians, Salvadorans, Argentines, Chileans, Bolivians, et cetera. They're all cut out.

Two: Non-Hispanic illegals, like Chinese, Vietnamese, Koreans, Taiwanese, Malaysians and so forth. Wang Yung from the Organization of Chinese Americans in Washington, D.C., branded the proposal as biased. Quote: "The obvious question is, why to them and not to Asian Americans or people from other parts of the world?" unquote.

Problem three: The U.S. Border Patrol up in arms. When amnesty was granted to Hondurans and Nicaraguans in the aftermath of Hurricane Mitch, border agents in McAllen, Texas, detained twice the number of illegal immigrants. All of the above is understood, paradoxically, by the Hispanic Caucus in the U.S. Congress, which wants not Mexicans-only, but across-the-board amnesty, like Ronald Reagan's in 1986.

(Begin videotape segment.)

REP. SILVESTRE REYES (D-TX) (Chairman, Congressional Hispanic Caucus): We don't want to limit it to Mexicans, Hispanics. I think what one needs to do is recognize that a legalization program has to take place. And the second component is that if we're going to have a guest worker program, then it should be fair. The guest workers should be provided good health care, good housing and fair wages.

MR. MCLAUGHLIN: Including non-Mexican Hispanics? Including Asiatics?

REP. REYES: Everyone.

(End videotape segment.)

MR. MCLAUGHLIN: As we said, when asked about amnesty for those from other countries, President Bush said that he would consider it.

Question: If Bush goes with the Mexicans-only amnesty, what is the political impact? Lawrence Kudlow.

MR. KUDLOW: Well, I think it's generally negative, although obviously the Bush administration's making a big push for the Hispanic vote. And that's a vote in California and Florida. And that's also a vote in New York and New Jersey and Connecticut and places like that. But I think it's almost inevitable they're going to expand this thing to include other groups.

And let me just say, I am in favor of expansion. I think these immigrants have made a terrific contribution to the economic prosperity in the U.S. I also think there's a strong demand for their labor as workers. Once the prosperity resumes, we're going to need new workers. And finally, regarding Mexico, particularly, if Alan Greenspan would stop deflating our economy, we wouldn't have such troubles in Mexico and we wouldn't have such a source of excess workers coming across the line. So there's that angle, too.

MR. MCLAUGHLIN: The guest workers that are being looked at are 250,000, but it has to be the whole enchilada, according to the Mexican foreign minister; meaning, no guest -- you get guest workers providing our illegal Mexicans are legalized.

MS. CLIFT: Look. Bush has floated a proposal here. He's already banned the word "amnesty." He talks about regularization and earned adjustment. The Democrats have now got a small army of lawmakers working on alternative proposals. Our economy, as Larry points out, is dependent on this army of illegal immigrants. They have been treated inhumanely. We read all the stories of them struggling across the border, dying for lack of food and water.

So there's going to be an expanded guest worker program, and in order to get Democratic votes, you're going to have to have some element where these people can get on a path towards citizenship. It's going to happen.

MR. MCLAUGHLIN: Are the Democrats engaged in a bidding war with Bush? That is, they're saying, "Yes, it's okay to have all of the people who want to come here legalized, but not your way."

MR. BLANKLEY: Yeah, sure, but there's a much bigger picture here. You know, geography is destiny. Mexico is right next door to the United States. For a hundred years, the Mexicans have said, "So near to the United States, so far from God."

It's inevitable -- anyone who's gone to Los Angeles for 20 minutes knows the Mexican population and American population is going to have a much more intimately connected relationship for all time.

This is a historic opportunity, and the fact that Bush, coming out of Texas, and Fox had known each other as governors before -- this is sort of like Reagan and Thatcher regarding communism. This is a kismet moment in history, where I think you have a chance for historic realignment over the relationship between Mexico and its people and America and its people.

MR. MCLAUGHLIN: So you're comfortable with Mexicans only as the amnesty --

MR. BLANKLEY: No, the details sort of don't matter. They may bring in the Honduran --

MR. MCLAUGHLIN: They don't matter? What about the non-Mexican Latinos?

MR. BLANKLEY: No, no, no, I'm saying --

MR. MCLAUGHLIN: You think they're going to be happy? Is he going to win any votes from those?

MR. KUDLOW: Yes. Yes, he will. Yes.

MR. BLANKLEY: I don't worry about the votes right now. I think the Central Americans will probably be included in this package eventually. That's horse trading in Washington. The reality is, we have a historic opportunity now.

MR. ZUCKERMAN: I tell you, I have a lot of problems with this program, because it's not only going to amount to millions of people at this point, but with family reunification as the primary basis for visas going forward, a lot of the people who are going to be made legal now will then be able to bring in their families. This is going to be a huge problem for the United States. It's going to add to a whole array of our costs, and I think we have to move very cautiously on it.

I don't agree with Larry that this is a community that necessarily adds to the value-added of this society at this point.

MR. KUDLOW: But I could tell you --

MR. ZUCKERMAN: Just a minute. And particularly if your choice is to bring people with a much higher level of education and skills in a high-tech, information-based economy, I just don't understand why we're rushing forward, except for the politics. I don't think the economics make --

MR. KUDLOW: They're already --

MS. CLIFT: Well, we're not rushing forward, but we're acknowledging the fact that there 8 million people in this country who are here --

MR. KUDLOW: They're here. They're here!~ Right. Right.

MS. CLIFT: -- and they're here illegally, and they are doing jobs that Americans do not want to do.

MR. KUDLOW: That's correct.

MS. CLIFT: And if they were not here, our economy would collapse.

MR. KUDLOW: And the politics here are so interesting to me, John, particularly with the Mexican/Central American/South American group, because they're more politically conservative, and George Bush knows that, and so does his adviser Karl Rove. We could be talking realignment here. These are people who are socially conservative. They're pro-entrepreneur, pro-business on the economic side. They tend to pro-school choice.

MS. CLIFT: And they tend to be pro-Democratic -- (inaudible) --

(Cross talk.)

MR. MCLAUGHLIN: Just a moment. Just a moment. I don't think we're going --

MR. KUDLOW: But this is where Bush is searching for realignment.

MR. MCLAUGHLIN: -- we're not going to the heart of the political matter. Now Bush is faced with a choice. It's blanket amnesty for all, or it's Mexicans only. And if it's blanket amnesty for all, I don't think his constituents would stand for that, number one.

MR. ZUCKERMAN: I agree. It would never fly.

MR. MCLAUGHLIN: Number two, the economy -- it comes at a bad time --


MR. MCLAUGHLIN: -- because the economy is not great. If it's amnesty for Mexicans only, that creates an enormous number of problems, unless it's part of a comprehensive settlement, which is what they're talking about.

(Cross talk.) They want to have our DEA officials going inside Mexico --


MR. MCLAUGHLIN: -- to take care of the drug problem. They want a guarantee that the Mexicans will obey the border enforcement. That's number two.

MR. ZUCKERMAN: Listen, I think we would have to redo our immigration laws if this becomes a part of it. You're not just talking about today, you're talking about what it's going to be like in five and 10 years. You're going to have another whole slew of people coming into the country.

(Cross talk.)

MR. MCLAUGHLIN: All right. We got to get out.

MR. ZUCKERMAN: They're not coming in any way to that degree.

MR. MCLAUGHLIN: I want to know, if you were George Bush and you were looking at all aspects of this, what would you do? Would you go for a Simpson-Mazzoli type blanket amnesty for illegal aliens, as Ronald Reagan did in 1986? Or would you limit it to Mexican as part of a larger comprehensive agreement that would get into the drug question, et cetera, and the crossing of the Rio Grande and dying from suffocation in tank trucks?

MR. KUDLOW: Well, I don't the drug thing is so important here. But I think --

MR. MCLAUGHLIN: A huge amount of drugs comes from Mexico. You know that.

MR. KUDLOW: Oh, I know. I know, John. Let's cut the demand.

But the point on that is, Simpson-Mazzoli did have an expansion over a multi-year period, with caps. And I think that's exactly the direction Bush is going. And I think he should. A great nation like ours should be able to attract, house, work, clothe, and school these immigrants. It's a terrific thing.

MR. MCLAUGHLIN: I think that the Democrats have got Bush in a hammerlock here by advancing the idea of a total amnesty.

MS. CLIFT: Well, he has floated an idea -- he's a master of gestures -- his own party doesn't want it. He has not thought it through about how he would implement it. And so he has invited criticism. There's not going to be a blanket amnesty --

MR. BLANKLEY: Well, look --

MR. MCLAUGHLIN: I have a question for you. Is he drifting now -- in the light of what he said at week's end, is he drifting towards the blanket amnesty for all on a graduated basis, as described by Kudlow?

MR. BLANKLEY: First of all, I don't think Eleanor knows whether he's thought it through. All we have so far is a leak out of Colin Powell's shop. But -- but --

MR. MCLAUGHLIN: And he was -- he was Texas governor, so he's seen the migrations across the border.

(Cross talk.)

MS. CLIFT: I think it's a pretty fair assumption to say he has not thought this through.


MR. BLANKLEY: Let me --

MS. CLIFT: I stand by that.

MR. MCLAUGHLIN: Well, Eleanor thinks he hasn't thought through anything. You know that.

(Cross talk.)

MR. KUDLOW: She doesn't respect him.


MR. BLANKLEY: But look. My suspicion is it's going to be a broadly defined guest worker program. It won't be quite a blanket amnesty.


MR. BLANKLEY: There will be some restrictions and probably, maybe even in the second tranche it'll include Central Americans.

MR. KUDLOW: Yes. That's possible.

MR. MCLAUGHLIN: Blanket, you mean blanket only for Mexicans --

MR. KUDLOW: No, that's good.

MR. MCLAUGHLIN: -- or blanket for all races?

MR. BLANKLEY: No, I think it's --

MR. MCLAUGHLIN: No limits. Blanket means all races, across the board.

MR. BLANKLEY: No, just Central America, and because of the geography of it, because they're right next door.

MR. MCLAUGHLIN: What do you think?

MR. ZUCKERMAN: I think the politics of limiting it to the Mexicans or even to Central Americans are disastrous. You would alienate every other minority community in this country. So I think it's got to be broader than that. He has no choice in it. He'll never get it done without that

MR. MCLAUGHLIN: So it's Simpson-Mazzoli, graduated.

When we come back, who really caved in Kyoto?


MR. MCLAUGHLIN: Issue two: Koizumi's karate on Kyoto.

SEN. TOM DASCHLE (D-SD) (Senate majority leader): (From videotape.) We have minimized ourselves in the environmental debate that is ongoing globally by our refusal to participate in the Kyoto treaty negotiations, and by the isolation we now feel by being left out of the recent compromise.

MR. MCLAUGHLIN: Charges of isolationism being leveled by Democrats and the press at President Bush for rejection of the Kyoto Protocol continue to fill the air.

The hysteria was fueled by a 38-nation pact hammered out in Bonn, Germany, which requires industrialized nations to cut greenhouse gas emissions. The casting vote on the agreement was the Japanese prime minister, Junichiro Koizumi. Less than a month ago, he pledged not to go along with Kyoto unless the U.S. signed on. In Bonn, however, Koizumi, under pressure, yielded. But he did so only after he exacted concessions to the treaty so vasectomizing that even George W. Bush could have signed it.

One: Carbon sinks. Japan's large areas of forests and other carbon dioxide-eaters called "sinks" were permitted under the new terms of the treaty to deduct 3.8 percentage points, cutting its total mandated greenhouse emissions to a mere 2 percent.

Two: Penalties out. Japan argued strenuously against the original provision that imposed draconian penalties on countries unable to meet their emissions targets. Killing the provision altogether emasculated the treaty, preventing it from being legally binding. It is now described lamely as, quote-unquote, "diplomatically binding."

Three: Emissions trading. Countries wishing to do so can buy emissions credits, so to speak, from countries that have exceeded their requirements.

Four: Credit for investment. Industrialized countries are entitled under the new terms to emissions credits as incentives, so that they will invest in greenhouse gas reduction projects in developing countries.

So, in light of all of the above, some have argued that Bush is the winner of this contest. His fatally flawed insistences and his teaming up with Koizumi ultimately injected a measure of rationality into Kyoto, they say.

Question: Is this version of the Kyoto Treaty now so watered down that it no longer merits its original name? We're really talking here about the Bonn treaty. Eleanor Clift?

MS. CLIFT: They have clearly made some changes, but they have not emasculated the treaty, as you like to think. In fact, if the Americans had been in the room, maybe they could have gotten the treaty even more to their liking.

This is a treaty that the Americans should be part of and, instead, by the way that George Bush handled himself here, he has united the European public against the administration on the issue of global warming. And they picked up the American idea of pollution credits trading, which was championed by Al Gore during the campaign --

MR. KUDLOW: And the --

MS. CLIFT: -- and ridiculed by Bush. So Bush doesn't come away with any high ground on this one, John.

MR. MCLAUGHLIN: What do you think of the Bonn treaty?

MR. BLANKLEY: Well, it is somewhat watered down, but the reason why I think this administration would still not sign on is because it's a starting point that could go to a place like the original Kyoto provisions or something like them that could be more dangerous.

MR. MCLAUGHLIN: Is Bonn a better treaty?

MR. BLANKLEY: Well, it's a less bad treaty, but --


MR. BLANKLEY: But the question is whether the president wants to get this country in that process where he wants to take another parallel approach to the problem, and I think clearly he wants to take a parallel approach to it. Eleanor's right to the extent that even watered down, it's still a treaty that is probably not worth -- she thinks it's worth joining, but reasonable people would think --

MS. CLIFT: Me and a lot of other people, Tony. (Laughter.)

MR. MCLAUGHLIN: Now what about Daschle? Daschle says that Bush is an isolationist because he didn't involve himself in the treaty. However, he himself, Daschle, refused to involve himself in the treaty, because in --

MR. KUDLOW: Ninety-seven-nothing. Ninety-seven-nothing.

MR. MCLAUGHLIN: He voted with the Senate to have nothing to do with it.

MR. KUDLOW: He -- yeah. He was either part of the 97 or the nothing, but he --

MR. MCLAUGHLIN: So who's the hypocrite?

MR. KUDLOW: Daschle is basically the nothing here. I mean, he needs to back to the Grange states and figure out how the world works. The entire world is moving towards Bush -- on Kyoto, on SDI, on tax cuts and economic growth policies for the global recession.

Do you know something, John? When this thing first surfaced, this Bonn deal -- which is not a deal; it's just a protocol, it has no teeth whatsoever -- world stock markets sold off. You know why? Because this whole greenie assault that has no scientific whatsoever would be devastating to production and economic growth and job creation. And if Tom Daschle and some other leaders don't understand it, owners of stocks and businesses and people working do. That's why Bush has the politics on his side.

MR. ZUCKERMAN: I couldn't disagree with you more strongly.

MS. CLIFT: Right.

MR. ZUCKERMAN: If you think Bush has the politics on his side on this one, you and I just have a completely different focus on --

MR. KUDLOW: Well, they're moving towards him.

MR. ZUCKERMAN: I -- they're moving towards him in one sense, but this is not a -- what I don't understand, in fact, since this Kyoto treaty was sitting and going nowhere, why he sort of disassociated himself from it in the way that he did --

MR. MCLAUGHLIN: Because it was a bad treaty.

MR. ZUCKERMAN: It may have been a bad treaty, but nobody else had affirmed the treaty. I mean, the treaty was going nowhere. Why --

MR. MCLAUGHLIN: Does he get -- does he get any --

(Cross talk.)

MR. ZUCKERMAN: Why get yourself embroiled in all of this? And he had -- there's no doubt but he has alienated a lot of people in Europe on these kinds of issues.

MS. CLIFT: Right. George Bush has --

MR. ZUCKERMAN: It's not the end of the world.

MR. MCLAUGHLIN: It's a bad treaty.

MS. CLIFT: George Bush --

MR. MCLAUGHLIN: In Europe they know it's a bad treaty.

MR. ZUCKERMAN: And he's alienating --

MR. MCLAUGHLIN: They're only doing it because of the Greens.

MR. ZUCKERMAN: He's alienating --

MR. MCLAUGHLIN: The Greens are part of their governments over there, and they have to contend with that.

MS. CLIFT: George Bush --

MR. MCLAUGHLIN: The Greens are put in the charge of the environment over there.

MR. KUDLOW: He's alienating all the right people.

MS. CLIFT: George --

MR. ZUCKERMAN: He's alienated a lot of environmental people in this country.

MR. KUDLOW: (Laughs.)

MR. MCLAUGHLIN: Okay, George's --

MS. CLIFT: George Bush has --

MR. ZUCKERMAN: Environmentalism is a big issue in this country.

MR. MCLAUGHLIN: George's Genovese Jackpot.

PRESIDENT GEORGE W. BUSH: (From videotape.) We're young leaders who are interested in forging a -- a more peaceful world. Both of us want to seize the moment and lead.

RUSSIAN PRESIDENT VLADIMIR PUTIN: (From videotape and through interpreter.) We have to maintain a balance, thanks to which mankind could live in an environment of stability and relative peace.

MR. MCLAUGHLIN: The Russian and American presidents closed out the G-8 conference in Italy with a stunning surprise: a nuclear agreement with a three-component framework. One, alter the ABM Treaty, but save it. Two, go forward with anti-missile shield. Three, cut numbers of offensive nuclear warheads.

The deal stopped Democratic leaders in their tracks. Only days before, they were fearful that Bush's plans would cause the U.S. to abrogate the 1972 ABM Treaty unilaterally. Now Senator Carl Levin, the powerful chairman of the Armed Services Committee, seems impressed.

SEN. CARL LEVIN (D-MI, chairman of the Senate Armed Services Committee): (From videotape.) We did have a good meeting with the president. Much of the time was spent on the conversations that he had with President Putin. I felt reassured that he fully supports the importance of the relationship between Russia and the West, and I am hopeful that he will take the necessary time to try to get the changes that are necessary so that the testing can go forward without any limits.

MR. MCLAUGHLIN: Question: The Democrats were not counting on Putin, were they, when they put Bush in the pillory over their sacrosanct ABM Treaty, Tony Blankley?

MR. BLANKLEY: No, and this is actually a pretty substantial event. You have not only Levin at defense; you have Biden, Senator Biden, the chairman of the Foreign Relations, also switching sides.

What you're seeing --

MR. MCLAUGHLIN: What do you think of what Putin did?

MR. BLANKLEY: Well, Putin is playing a very intelligent game. He's trying to reposition Russia and Western Europe and the United States to his advantage and potentially to our advantage, but he's interested, obviously, in Russia.

But what's happening in a broader sense is that Bush is discarding the treaty systems of the Cold War period, like the germ warfare treaty, which he also discarded, and is starting to present a more comprehensive -- not yet comprehensive, but building a more comprehensive post-Cold War treaty.

It's going to see like -- the Clinton years will have been seen as a transition between the Cold War and the post-Cold War.

MS. CLIFT: Boy, that's putting --

MR. BLANKLEY: Now we're beginning to see the post-Cold War period.


MS. CLIFT: That's putting a very elegant --

MR. BLANKLEY: Thank you! I appreciate that. (Laughter.)

MS. CLIFT: -- gloss on a president who is walking away from international treaties that he doesn't like. And I wouldn't count on Mr. Putin to be there in the crunch. He's playing for time. He wants to be on the world stage. And this administration says it's going to walk away from the ABM Treaty no matter what Russia does.

MR. MCLAUGHLIN: Eleanor, didn't you hear what Senator Levin said; I hope they continue to make the changes to the treaty.

MR. ZUCKERMAN: Right. You can say what you want --

MR. MCLAUGHLIN: The treaty's not going to go away. They're just going to amend the treaty.

MR. ZUCKERMAN: It's a major accomplishment for Bush.

MR. MCLAUGHLIN: He's not walking away from it.

MS. CLIFT: Well, let's see what happens.

MR. MCLAUGHLIN: The same treaty will remain in place, but they'll go about putting up a missile shield.

MS. CLIFT: Well, let's see if Putin and Bush walk away hand in hand. We'll put money on that.

MR. ZUCKERMAN: It's a major political accomplishment for Bush notwithstanding what you would like to say about it. There's absolutely no doubt about it. He changed the whole politics of it by this agreement with Putin. I don't see how you could deny that. It's very obvious.

MR. KUDLOW: And it shows vision. It shows vision.

MS. CLIFT: (Laughing.)

MR. KUDLOW: And it shows effectiveness. And it shows he can play on the stage of international politics. You know, John, when Putin said he is a deep thinker -- and it was a big quote -- he wasn't referring to Mr. Levin or Mr. Daschle or Mr. Biden; he was referring to Mr. Bush.

MR. MCLAUGHLIN: What's the political angle? I ask you: What's the political angle for Putin?

MR. KUDLOW: Listen. For Putin, I think he is repositioning Russia, frankly --

MS. CLIFT: Money.

MR. KUDLOW: -- with a tilt away from Europe and a tilt towards the United States. I think Putin would rather attempt to do business with us in foreign and domestic economic policy --


MR. KUDLOW: -- because we are the free-market country. We are the pro-business country.

MR. MCLAUGHLIN: Is there another reason?

MR. KUDLOW: He's using U.S. dollars circulating in Moscow.

MR. MCLAUGHLIN: By dealing solo with George Bush, he's also elevating his own status and the status of Russia.

MR. KUDLOW: Yes, absolutely. And on the stage. It helps Putin.

MR. ZUCKERMAN: There is a longing in Russia for Russia to be a player on the world scene.

MR. KUDLOW: Right.

MR. ZUCKERMAN: It is one of the signal accomplishments since he has been the president of Russia. This is another example of it. You will see all the photo-ops, and it's a great political accomplishment.

MR. MCLAUGHLIN: There is another reason. What's the other reason?

MS. CLIFT: He wants his --

MR. MCLAUGHLIN: The other reason is money.

MS. CLIFT: Money.

MR. ZUCKERMAN: He also gets money.

MR. MCLAUGHLIN: He's going to get money. He's going to be helping build the anti-missile shield.


MR. MCLAUGHLIN: He's going to get contracts for Russia.


MR. ZUCKERMAN: Absolutely.

MR. KUDLOW: No, no, not on the money. He knows -- Bush has already told him -- Paul O'Neill, secretary of Treasury, was over there -- that we are not going to use the Clinton-Gore policy of ladling out loans. It's not money per se.

MR. MCLAUGHLIN: I'm talking about contracts, contracts to help build the shield.

MR. KUDLOW: It's bringing down trade barriers, building up business. They use the U.S. dollar as their currency. They've had a tremendous flat-tax reform with a 13 percent tax. This is terrific capitalist reform.

MR. MCLAUGHLIN: He's going to cut down his ICBM arsenal. They're going to cut their warheads, less maintenance costs.

MS. CLIFT: I have never --

MR. ZUCKERMAN: Mike Bloomberg is going to run for the mayor of Moscow. (Laughter.)

MR. MCLAUGHLIN: Mike Bloomberg has $5 billion, you've only got one, and you've got to catch up because you're in that seat.

MR. ZUCKERMAN: I'll settle where I am.

MR. MCLAUGHLIN: Otherwise, Mike will be in that seat if he loses the election. (Laughter.)

We'll be right back.


MR. MCLAUGHLIN: Predictions. Lawrence, very fast.

MR. KUDLOW: Greenspan will be forced to cut interest rates by 50 basis points, a half a percent, and soon, given the bad economic numbers.

MR. MCLAUGHLIN: Right on. Eleanor?

MS. CLIFT: Bush's faith-based initiative dead in the Senate.

MR. MCLAUGHLIN: I don't know about that.

MR. BLANKLEY: Brett Schundler, the Republican candidate for governor of New Jersey, will win in an upset.

MR. MCLAUGHLIN: No kidding!

MR. BLANKLEY: Absolutely.

MR. ZUCKERMAN: The Protestants and Catholics in Ireland are going to work out a deal for decommissioning of weapons and the reform of the police, and will put the Easter agreement on track again.

MR. MCLAUGHLIN: Contrary to what Minority Leader Richard Gephardt and other Democrats are saying, the budget surplus will not be erased this year; it will be $150 billion, in that range.





MR. MCLAUGHLIN: Issue three: Bloomberg in bloom.

MIKE BLOOMBERG (President, Bloomberg Financial Markets): (From videotape.) My name's Mike Bloomberg and I'm running for mayor, to build on what's been accomplished, not tear it down.

MR. MCLAUGHLIN: Michael Bloomberg, a billionaire tycoon, dominates the media world with his sprawling financial information company. The wire service, Bloomberg News; the syndicated radio station, Bloomberg Radio, which announces Bloomberg News Time, Bloomberg Sports, Bloomberg Traffic, updates the Bloomberg CommuterCam; and there are the Bloomberg ticker scrolls and the proprietary financial data terminals known as "Bloombergs." And there is Bloomberg TV, the television network.

But Mr. Bloomberg's latest enterprise, running for mayor of New York, may be his biggest challenge ever. The 59-year-old media baron, worth $5 billion, has already pledged more than 20 million to finance his campaign. A cradle Democrat, Bloomberg switched parties to avoid the crowded Democratic primary. He faces off against former Congressman Herman Badillo in the Republican primary in September.

But Mr. Bloomberg has a lot of ground to cover. A recent Quinnipiac College survey shows all four of the Democratic candidates lead Bloomberg by better than a two-to-one margin. Bloomberg's strategy: bombard the airwaves with television ads. His message, that he will carry on the work of New York's incumbent mayor, Rudy Giuliani. Here's Bloomberg talking to the people:

MR. BLOOMBERG: (From videotape.) Going back to politics-as-usual in New York City is crazy. Together, we'll keep making progress on crime, and if we bring the same energy and same focus that made our streets safer and use it to improve public schools and public health care, this great city will be even better.

MR. MCLAUGHLIN: So what are the chances that this is going to be a Bloomberg win? Mort, you live in New York, right?


MR. MCLAUGHLIN: Among your other homes.

MR. ZUCKERMAN: He has a chance, but a slim one. I think for a Republican to win in New York City, it has to be with a referendum on a Democratic incumbent for him to get tin the first time. So I think he's going to have a very difficult time. He's going to spend a lot of money. He'll get himself well-known. But I think he loses to even the weakest Democratic candidates, in my judgment.

MR. MCLAUGHLIN: Mort, it's a referendum on Giuliani, and that being the case, Bloomberg is a shoo-in. That's the logic. He's following in the path of Giuliani.

MR. ZUCKERMAN: That is the -- they're all following in the path of Giuliani. They're all trying to follow in the path of Giuliani. All I can say to you is that when they get into the voting booth, okay --


MR. ZUCKERMAN: -- they're voting either for, let's say, Mike Bloomberg as the Republican and, say, Mark Green as the most likely Democrat; it's not going to be about Giuliani in that point -- at that point.

MR. MCLAUGHLIN: All right. One quick --

MR. ZUCKERMAN: Bill Bratton, who was Giuliani's police commissioner, is supporting Mark Green.

MR. MCLAUGHLIN: Does Bloomberg have the right stuff?

MR. ZUCKERMAN: Oh, yes. No, he's a very talented man. I think -- look, he's got the right stuff, certainly, as a private businessman. Whether you can translate that to public life, nobody ever knows.

MR. MCLAUGHLIN: The other New Yorker. Larry?

MR. KUDLOW: I agree with much of what Mort has said. It's tough for Bloomie to win, because it's such a Democratic city.

MR. MCLAUGHLIN: "Bloomie"? "Bloomie"? (Soft laughter.)

MR. KUDLOW: Yes. That's how we affectionately call him in New York.

I say that --

MR. BLANKLEY: (Off mike.)

MR. ZUCKERMAN: You're talking about the department store.

MR. KUDLOW: I say that as a former Bloomberg columnist.


MR. KUDLOW: But you know what? I'd like to see him take tougher positions on some key issues. I'd actually like to see him polarize a little bit to get some sizzle into his campaign. For example --

MR. MCLAUGHLIN: What do you want to see him do? Something economic? Financial?

MR. KUDLOW: For example -- hang on a second. Last week he actually came out in favor of saying the Lord's Prayer in schools. This is a good thing. It will help the school situation --

MR. ZUCKERMAN: That isn't quite what he said.

MS. CLIFT: Well, if he has any problem -- (chuckles) --

MR. KUDLOW: I'd like -- hang on. One last point, Eleanor. I'd like to see him slash tax rates on individuals and businesses and move into the Giuliani realm on that, too.

MS. CLIFT: Look, as a New Yorker by birth, there is one scenario where he can win, and I don't think he's going to do it. One, he's going to out-Democrat the Democrats; he's going to run to the left, and not on the issues you're talking about.

MR. KUDLOW: That's a loser. That's a loser. That's a loser.